The Kenyan economy described as a Bandit Economy by former Chief Justice Willy Mutunga, is afflicted by cartels that conspire to extort money from citizens by overcharging them.
The Competition Authority, tasked to smash cartels that fix prices, has yet to make any inroads as compared to say, the Competition Commissioner of the European Union.
Consequently, only airtime and maybe table salt in Kenya is properly priced.
Only the Communications Authority of Kenya has shown any mettle in taking on its industry players. It lowered termination rates which saw the prices of making phone calls reduce, and it also took on broadcasters who wanted to frustrate digital migration.
But most other regulators seem like members of the cartels or business associations they are meant to regulate.
The Central Bank of Kenya has mysteriously always seemed to hold brief for Kenyan Banks whenever an issue of concern about the sector is raised.
Twice, efforts have been made to consolidate the sector to see fewer but bigger and more solid banks in the country, and twice, the CBK has thwarted those moves.
But it is in controlling lending rates by banks to households that represents CBK’s singularly most glaring failure.
Ndungu, despite several reforms aimed at lowering rates always used to blame anyone but the banks for this.
He would cite what he called “structural rigidities” and “intermediation inefficiencies” for the failure of loose monetary policy to result in lower lending rates.
The Banking Act Amendment Bill is proposing to cap lending rates to four percentage points above the Central Bank Rate, the rate at which the lender of last resort lends to commercial banks.
Bankers predictably have opposed this claiming it will result in turbulence in the market and lock out households from accessing credit. CBK has agreed with them, maddeningly perpetuating its behaviour of always siding with the sector instead of public interest.
The president, on whose desk the Bill sits awaiting assent or rejection must sign this Bill into law for public interest.
The scare mongering perpetuated by the banks who would seek to make us think they are arguing for the common good of the very same citizens they have been fleecing for decades must not be listened to.
For donkey years despite many reforms, lower government borrowing, establishment of Credit Reference Bureaus etc, banks have stubbornly refused to lower lending rates while offering depositors peanuts for their money.
Like Michuki rules that curbed matatu madness and reduced number of passengers that these vehicles used to carry or mobile operators who were forced to lower calling rates from Sh40 per minute to Sh3, Banks must also confront the reality that more loans to Kenyans at cheaper rates is the future of the sector not fewer loans at exorbitant rates.
Sign this Bill Mr. President.
Mbugua is a communications consultant who comments on topical issues